Biotech company CEO sentenced to seven years in prison

John Joseph Moakley United States Courthouse, Sept. 18 2019, Boston, MA. Photo by Chris O'Brien/BU News Service

By Stella Lorence
BU News Service

BOSTON – PixarBio CEO Francis Reynolds was sentenced to seven years in prison with three years of supervised release in U.S. District Court Tuesday.

Reynolds was convicted by a jury on one count of security fraud and three counts of obstructing a Securities and Exchange Commission investigation after a three-week trial in October 2019.

Reynolds made false and misleading statements to investors about the development timeline of the Medford biotechnology company’s product “NeuroRelease,” a post-surgery pain reliever.  Reynolds claimed that the drug could solve the opioid crisis, according to prosecutor Sarah Bloom.

“This was a group of people who were particularly trusting,” Bloom said of PixarBio investors.  “They fell victim to Reynold’s storyline.”

Contrary to Reynold’s claims, NeuroRelease was not a new drug that could solve the opioid crisis but rather an existing drug that PixarBio developed a new injection-based delivery method for, according to a May 2018 Department of Justice release.

Reynolds also made misleading statements about his medical background, falsely claiming that he had cured his own paralysis after a 1992 car accident. He also engaged in manipulative trading practices with two associates, Kenneth Stromsland and Jay Herod.

“This is a very serious set of frauds and a very sophisticated set of frauds,” Bloom said.  “It’s important that the market sees that there is a very serious punishment for that.”

Both parties are expected to finalize the restitution documentation by Feb. 18.  The actual loss calculation was estimated to be $7.5 million.

Reynolds is also the defendant in an ongoing civil case against the Securities and Exchange Commission.

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